Why is Victoria's Secret (VSCO) Stock Trading Sharply Higher Today

Shares of Victoria’s Secret (NYSE: VSCO) are up more than 9% in pre-open Wednesday after the company announced that it launched an accelerated share buyback program.

The company will work with Goldman Sachs to repurchase $250 million of its common stock. Moreover, VSCO reaffirmed its fourth quarter sales, operating income and earnings guidance.

Victoria’s Secret will pay $250 million to GS in exchange for roughly 4.1 million shares on December 31, 2021.

“I am very pleased with our fourth quarter performance to date and believe we have solid plans in place for the balance of this holiday selling season. I was particularly encouraged by our sales growth during the peak shopping days over the Thanksgiving weekend and the large rush of business as we approached December 25th. Our stores are in a good inventory position as we begin our semi-annual sale and anniversary the positive stimulus impact on sales in January of last year,” CEO Martin Waters commented.

Wells Fargo analyst Ike Boruchow reiterated an Overweight rating and a $85.00 per share price target on VSCO stock.

"This morning's update is likely to come as a positive surprise given that lowered backdrop. Net/net, we don't see anything today that changes our bullish stance on the company at current levels (just ~8.0x our updated FY22 EPS estimate). We are raising our 2022 EPS to $6.30 (from $6.06) to account for the ASR. VSCO has showed us the brand momentum remains on track and increasingly shareholder-friendly actions are yet another reason to remain positive," the analyst said.

Shares of VSCO closed at $48.70 yesterday.

By Senad Karaahmetovic | [email protected]

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